Car Versus Truck/SUV Showdown Is A Replay With A New Wrinkle
With auto manufacturers making up to 90 percent of their profits from pick-up trucks, SUVs and smaller profile crossover vehicles, the industry is eliminating many full, midsize and compact sedans.
This is not a new scenario. Over 20 years ago car makers came up with a winning money making equation. Leveraging a sustained strong US economy, low fuel prices and supposed “commercial stimulus” oriented leasing tax breaks and less stringent fuel consumption standards on higher profit truck-based vehicles, the manufacturers drove a massive market shift away from sedans and small cars, with ultimately disastrous consequences starting in 2007.
The current Car versus Truck/SUV showdown is similarly set with strong consumer confidence, a sustained stretch of low fuel prices for the last five years, just starting an ominous rise, and a 2011 concession in the Government fuel standards that again favors larger footprint vehicles.
And while the improved fuel economy of even the largest SUVs and pickups, including 48 volt mild hybrid electrification, and more domestic energy production, provide a measure protection from sudden spikes in fuel costs, currently strong overall US vehicle sales belie a perilous road ahead.